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Commentary & Analysis

The Shift to "Packages"

By Barbara Pellow "

By WhatTheyThink Staff
Published: March 7, 2005

By Barbara Pellow "In more mature markets, products can't just work -- they have to work well together." March 7, 2005 -- Several weeks ago, USA Today featured a story about the "high tech industry" shift to "packages." The article reviewed the reorganization by firms like Intel, HP, Motorola, and AOL around "solutions" rather than individual products. For example, computer maker Hewlett-Packard combined its PC and printer divisions, linking two products that are usually purchased together. Motorola realigned into four consumer-centric units – personal devices, government and business, professional networking, and consumer networking equipment. Historically, tech firms have been organized around their technology rather than their customers. This worked well in an economy in which getting products to market fast was key. Tech analyst Rob Enderle commented, "In more mature markets, products can't just work -- they have to work well together." You might be asking, "What does this have to do with the printing business?" First, the printing industry is a mature market. Secondly, in looking at industry consolidations and successful high growth print operations, I quickly realized that packaging products and services that are usually purchased together is a key growth strategy--as much for us as it is for the high tech industry. There are several specific examples of firms that are maximizing share of customer and driving synergistic revenue streams by building the right "packages" of solutions. For Small Business and the Consumer Market A simple example is the combination of FedEx and Kinko's to deliver packaged services to the consumer and small business marketplace. When customers log on to the FedEx Kinko's web site, they can order package/envelope services, office printing, freight, expedited shipping, or commercial printing. The simplest combination is printing to FedEx Kinko's using a simple web browser interface with an option for the customer to either pick up the materials or have them shipped. FedEx Kinko's has "packaged" a print and delivery model to meet the needs of small businesses. VistaPrint has "packaged" premium quality full-color printing, accessibility, and affordability. VistaPrint has been in existence since 1994--before, during and after the dot-com craze. From 1994 to 1999, VistaPrint was a small desktop publishing business that also sold specialty papers. VistaPrint launched its first true Internet application in 1999. Its vision and business model has not changed since that time. President and CEO Robert Keane said, "We are in a market where traditional printers don't compete. We are providing micro orders to the Small Office Home Office (SOHO) customer. Our competition is do-it-yourself printing. Our objective is to deliver quality, cost, speed and convenience so that we are the very best alternative in our chosen market." The small business customer can access the site and order all the printed materials needed for business, including business cards and letterhead, return address labels, magnets, brochures, postcards, and sales and data sheets. VistaPrint has "packaged" premium quality full-color printing, accessibility, and affordability. They offer a full compliment of all printed materials to satisfy the needs of any small business from a single Web site. A New Model for Custom Publishing There have been significant discussions about the value of custom publishing in enhancing customer relationships. Custom publishing is the delivery of editorial content from a sponsoring company to a targeted audience. Whether in print or electronic form, custom publications provide intrinsically valuable information that hopefully moves the perceptions and behavior of the audience in a desired direction. Initially, custom publishers were comprised of editorial staffs that helped communicate brand messages to chosen customers in a powerful way through customized content and controlled distribution. They worked to leverage and complement existing brand initiatives by developing entertaining and informative long-form media content to increase demand for products and services. Think of a health and wellness magazine sent to the members of a health plan. Think of a food and cooking magazine sent to a gourmet store's client list and other consumers in the immediate Zip Code. Think of an e-newsletter sent to a known set of runners and sponsored by a sneaker company. All of these are custom publishing efforts. All deliver very targeted messages to an interested audience. In today's market, we are seeing custom publishers build print facilities and printers buy custom publishers. Owners concluded that custom publishing and print are purchased together, so it makes sense to "package the offering." For example, Toronto-based Market Connections was incorporated in 1992 by its two principals, Michael Moran and Daniel Brown. The company was created to provide a variety of graphic design, document management, print-on-demand, publishing and production services to the United States and Canadian direct marketing community. Market Connections' packaged products leverage information from customer databases and electronic publishing. Market Connections has established itself as a North American leader in the production of customized communications programs for financial professionals. Many experts agree that one of the most effective ways to establish and maintain relationships with clients is through the regular use of newsletters. And Market Connections is capitalizing on this proven methodology. Market Connections produces financial newsletters for blue-chip clients in both the United States and Canada. Its "packaged offering" combines editorial newsletter content, creative capability, new digital color print technologies for variable data, innovative formats, and the ability to leverage information from customer databases by integrating it into the world of electronic publishing. In the last 12 months alone, Market Connections has produced customized newsletters for more than 5,000 financial professionals from over 60 different companies. Toronto-based also St. Joseph Corporation decided that the integration of print and publishing was a good business model. The firm has grown steadily over the past few decades to become Canada's largest privately-owned commercial print, document solutions, publishing/media, and content creation company. In 2002, St. Joseph acquired Multi-Vision Publishing Inc., a Toronto-based publisher of consumer and custom magazines whose award winning titles include Elm Street and Canadian Family. It also acquired Key Media Ltd., publisher of some of Canada's leading, award-winning magazines: Toronto Life, FASHION Magazine, WHERE magazines, and WeddingBells. Together with Multi-Vision Publishing, the acquisition of Key Media established St. Joseph Corporation as Canada's third largest magazine publisher. The "package" St. Joseph Corporation delivers combines content creation and printing to address the needs of specific markets. Supply Chain Management The "packaged" solution from Banta blends print with management of the overall print communications supply chain. Supply chain management is an important concept in the printing industry. It refers to the coordination of processes involved in producing, shipping and distributing both print and any ancillary items wherever and whenever they are required. With the addition of web interfaces, firms are providing global access to print production facilities and warehouses so that sales reps, agents and franchisees can order printed materials online. Firms like Banta are offering a complete range of supply chain management solutions and acting as a global outsourcing partner. Banta executes critical elements of the supply chain including materials management, customized complex kitting, and distribution and fulfillment services. Banta's objective is to create value by helping customers increase supply chain efficiencies and deliver products more cost effectively on a global basis. Within the print sector, Banta helps a variety of companies improve the overall performance of their print and promotional fulfillment programs. Banta's print specialists identify opportunities to reduce total costs, accelerate time-to-market for critical information and increase sales by better managing the steps involved in the production and fulfillment processes for items ranging from information kits and enrollment packages to promotional items for a nationwide sales force or channel partners. The "packaged" solution from Banta blends print with management of the overall print communications supply chain. AKSESS is designed to give customers control over their inventory of printed and collateral materials. Cleveland-based Great Lakes Integrated offers a service that it calls AKSESS to support its customers' supply chain management activity. AKSESS supports the "what, where and when" of creating and managing marketing and branding resources. AKSESS develops and delivers web-based marketing communications tools to track digital and material resources. Users can retrieve digital assets, create materials on screen, order from and check inventory, and issue requests for reprints. AKSESS is designed to give customers control over their inventory of printed and collateral materials. Extensive report functionality lets users take a virtual look into the warehouse. Users can check on, order from, and replenish inventoried assets, anytime from anywhere. The benefits of the AKSESS "package" include saved time and cost, and the ability to create and convey a consistent brand identity around the globe. This supply chain management solution is "packaged" with a full service print facility, warehousing and distribution. The Bottom Line The expectation is that a printer will deliver high quality affordable printing--that's the price of staying in the game. Just as high tech firms are migrating to "packaged" solutions, printers in today's market need to do the same by emphasizing the total offering. The expectation is that a printer will deliver high quality affordable printing--that's the price of staying in the game. The base "print product" needs to meet customer's expectations. The real differentiator and the way that print will be de-commoditized is no different from the experience in the "high tech" market. A focus on complete offerings can help printers meet the end customer needs and drive synergistic revenue streams. It is the only way to ensure a profitable longevity into the future. Editor's Note: Look for more on this important topic next week. Michael McCarthy of Presstek will be talking about how packaged services are an imperative not only for print services providers but for vendors and suppliers as well.

 

 

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